Equity fund sales bounce back into positive territory in November 2016

Wednesday 11 January 2017

The Investment Association’s monthly statistics of UK investor behaviour in November 2016 show:

• Net retail sales of equity funds of £583 million in November - the first time they have been positive in 2016
• Total net retail fund sales were £1.5 billion in the month
• Tracker fund net retail sales were £1.2 billion
• Net retail outflow of £202 million from fixed income funds

Chris Cummings, Chief Executive of the Investment Association, said:

“UK investors were tempted back into equity funds in November. We saw positive flows into UK equities for the first time in 2016, which helped November to record the second highest monthly inflow of the year. The long period of uncertainty global markets have faced through the US election cycle also came to end with Donald Trump’s unexpected win.”

Alastair Wainwright, Fund Market Specialist, said:

“UK investors reversed the trend of 2016 and bought into equity funds in November, following ten consecutive months of outflows from equity products. Global funds continued to be most popular amongst equity investors, however, UK equity funds also recorded their first positive monthly flow of the year. Investor sentiment toward UK equities has a significant impact on overall sales figures as UK equity funds account for 22% of total industry funds under management and 40% of equity funds under management.

“Overall, we saw 2016’s second highest level of monthly net retail sales at £1.5 billion. Mixed asset funds continue to be popular with financial advisers and recorded their highest net monthly inflow of the year. Fixed income funds, which have been the driver of positive flows so far this year, experienced a net retail outflow for the first time since February.

“Tracker funds also attracted significant flows, the second highest monthly inflow on record. Equity trackers took in the largest share of net retail flows, £911 million. No single region stood out as UK, US, Japanese and Global tracker funds all experienced strong sales..”

FUNDS UNDER MANAGEMENT AND NET SALES

ASSET CLASSES

Mixed asset was the best-selling asset class in November 2016, with net retail sales of £634 million.

Equity funds were the second best-selling with net retail sales of £583 million.

Property and money market funds, however, both experienced small net retail outflows of £5 million and £18 million respectively.

Fixed income funds saw an outflow of £202 million, representing the first outflow since February 2016.

NET RETAIL SALES OF EQUITY FUNDS BY REGION*

Global equity funds were the best-selling in November with net retail sales of £420 million.

North American equity funds were the next best-selling with net retail sales of £244 million.

UK equity funds saw their first inflow of 2016, with net retail sales of £114 million.

Japanese equity funds were the fourth best-selling with net retail sales of £107 million.

Asian and European equities, however, saw outflows of £147 million and £165 million respectively.

THE INVESTMENT ASSOCIATION SECTOR RANKINGS

The top five best-selling Investment Association sectors for November 2016 were:

• 1.Targeted Absolute Return was the best-selling sector with net retail sales of £366 million.
• 2.Global with net retail sales of £220 million.
• 3.Mixed Investment 40-85% Shares with net retail sales of £183 million.
• 4.North America with net retail sales of £168 million.
• 5.Mixed Investment 0-35% Shares with net retail sales of £155 million.

The worst-selling Investment Association sector in November 2016 was the £ Corporate Bond sector with an outflow of £166 million.

RETAIL DISTRIBUTION

In November, gross retail sales for UK fund platforms totalled £8.1 billion, representing a market share of 45.7% (46.9% in November 2015).

Other Intermediaries including UK IFAs and Wealth Managers attracted gross retail sales of £4.0 billion, representing a market share of 22.3% (25.6% in November 2015).

Direct gross retail sales in November were £2.0 billion, representing a market share of 11.4% (6.3% in November 2015).

FUND PLATFORM PRODUCT SALES

For the five fund platforms that provide data to The Investment Association (Cofunds, Fidelity, Hargreaves Lansdown, Old Mutual Wealth and Transact) we saw net retail sales of £620 million in November.

Personal Pensions had net sales of £440 million, Unwrapped £223 million, and ISAs and Insurance Bonds saw outflows of £21 million and £22 million respectively.

For the same five fund platforms, funds under management as at the end of November 2016 were £219 billion, compared with £199 billion a year earlier.

ISAs**

In November 2016, funds in ISAs provided by fund companies and the five fund platforms that feed data to The Investment Association (Cofunds, Fidelity, Hargreaves Lansdown, Old Mutual Wealth and Transact) saw a net outflow of £227 million.

The top three best-selling sectors for ISAs based on the five fund platforms were:

• 1. Mixed Investment 40-85% Shares (£22 million net sales)
• 2. Mixed Investment 20-60% Shares (£18 million net sales)
• 3. Targeted Absolute Return (£11 million net sales)

FUND OF FUNDS

Funds of funds had a net retail inflow of £435 million in November 2016.

Funds of funds that invested internally saw net retail sales of £219 million, while funds that invested externally saw net retail sales of £215 million.

Funds under management for funds of funds were £119 billion at the end of November 2016, accounting for 11.7% of industry funds under management, compared with 11.5 % in November 2015.

Tracker funds saw a net retail inflow of £1.2 billion, the second highest monthly inflow on record (the highest was in June 2013 when we saw sales of £1.9 billion). Tracker funds under management stood at £136 billion as at the end of November 2016. Their overall share of industry funds under management was 13.4%, compared with 11.5% in November 2015.

ETHICAL FUNDS

Net retail sales of ethical funds were £44 million in November 2016. Funds under management were £12.0 billion at the end of November, representing a 1.2% share of industry funds under management.

Alex Hogan
Communications Manager
[email protected]
T +44 (0)20 7269 4620
M +44 (0)7508 724 066

To see a breakdown of the data referenced in this press release, please see all of the tables here.

The Investment Association's figures for fund sales cover retail and institutional sales in authorised unit trusts and open ended investment companies (OEICs) provided by our membership to UK investors. The figures do not include investment trusts and ETFs.

Each month small revisions to figures may have been made since the previous press release. This reflects additional information received by The Investment Association.

Net retail sales comprise total retail sales minus repurchases (including switches between funds), thus the figures can result in a negative figure or outflow.

The following Investment Association sectors have been grouped together to compile the figures for regional equity sales:

Direct Channels

Direct includes sales forces and tied agents, private clients and other direct to investor sales without intermediation.

** The Investment Association’s ISA figures are based on information collected from fund companies and five fund platforms (Cofunds, Fidelity, Hargreaves Lansdown, Old Mutual Wealth and Transact) where they are the ISA provider. Fund business through other ISA providers such as wealth managers is not included. The Investment Association’s figures cover about three-quarters of the whole of the market for funds held in ISAs.

About the Investment Association:

• The Investment Association is the trade body that represents UK investment managers who manage over £5.7 trillion on behalf of clients
• Our purpose is to ensure investment managers are in the best possible position to:
• • Build people’s resilience to financial adversity
  • Help people achieve their financial aspirations
  • Enable people to maintain a decent standard of living as they grow older
  • Contribute to economic growth through the efficient allocation of capital
• The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.
• The UK is the second largest investment management centre in the world, after the US and manages 37% of all assets managed in Europe.